Correlation Between Johnson Johnson and BTC Digital
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and BTC Digital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Johnson Johnson and BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and BTC Digital, you can compare the effects of market volatilities on Johnson Johnson and BTC Digital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Johnson Johnson with a short position of BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and BTC Digital.
Diversification Opportunities for Johnson Johnson and BTC Digital
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and BTC is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and Johnson Johnson is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Johnson Johnson are associated (or correlated) with BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and BTC Digital go up and down completely randomly.
Pair Corralation between Johnson Johnson and BTC Digital
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the BTC Digital. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 88.51 times less risky than BTC Digital. The stock trades about -0.21 of its potential returns per unit of risk. The BTC Digital is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 182.00 in BTC Digital on August 28, 2024 and sell it today you would earn a total of 1,350 from holding BTC Digital or generate 741.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. BTC Digital
Performance |
| Timeline |
| Johnson Johnson |
| BTC Digital |
Johnson Johnson and BTC Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and BTC Digital
The main advantage of trading using opposite Johnson Johnson and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, BTC Digital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BTC Digital will offset losses from the drop in BTC Digital's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| BTC Digital vs. WT Offshore | BTC Digital vs. Avient Corp | BTC Digital vs. U Power Limited | BTC Digital vs. Thor Industries |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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